Dealing with the Challenges of Capital Inflows in the Context of Macrofinancial Links
In the wake of the recent global financial crisis, emerging markets have seen a significantly higher degree of volatility in their capital flows. At the onset, all countries experienced sudden stops and increases in risk premia. Following this init...
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| Format: | Brief |
| Language: | English |
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2010/06/12464135/dealing-challenges-capital-inflows-context-macrofinancial-links http://hdl.handle.net/10986/10177 |
| Summary: | In the wake of the recent global
financial crisis, emerging markets have seen a significantly
higher degree of volatility in their capital flows. At the
onset, all countries experienced sudden stops and increases
in risk premia. Following this initial period of
uncertainty, financial markets began to differentiate
between the countries, and while most developing regions
have regained access to both, debt and equity issuance, the
pace of recovery of capital inflows has been particularly
remarkable for some countries. Given the likelihood that the
prevailing low interest rates in the developed world will
remain for some time to come, and given the prospects of
faster growth in emerging markets, it is likely that some
emerging markets will experience significant surges in
capital flows in the near future. This note examines
potential policy responses to maintain macroeconomic and
financial sector stability in the face of increased capital inflows. |
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